During infections by pathogens, such as viruses, bacteria, and parasites that invade human cells an important component of the immune defense against infection are natural killer (NK) cells. NK cells are a group of lymphocytes that differ from B and T lymphocytes in that their response is much faster. Unlike B and T cells, NK cells do not express antigen specific receptors. Therefore, proliferation and activation of NK cells does not start from a few NK clones but from the bulk of NK cells. Various chemokines and cytokines, such as type I interferons or interleukin (IL)-12 produced early during infections, activate NK cell responses. NK cells exert their function in two ways: by producing cytokines such as interferon-gamma and by killing infected cells. NK cells can also kill certain tumor cells. Despite the importance of NK cells in the innate response to many types of pathogens, it is still unclear what receptors and what signal transduction pathways control their activation. The killing of normal healthy cells is prevented by inhibitory receptors on NK cells that recognize surface molecules called major histocompatibility complex class I (MHC class I). The major goal of this project is to define the molecular basis of MHC class I recognition by inhibitory receptors on NK cells and how recognition of MHC class I by these receptors results in a negative signal transmitted to the NK cell. In addition, the regulation of NK cell activity by inhibitory receptors serves as a model to study other receptor systems that use a similar mode of negative regulation. NK cells express molecules called killer cell immunoglobulin-like receptors (KIR) that are specific for MHC class I. The KIR2D receptors bind to the MHC class I molecule HLA-C. The crystal structure of KIR2DL bound to HLA-C revealed at the atomic level how this receptor binds to its ligand, and confirmed earlier data on the importance of amino acids in KIR2DL that determined HLA-C specificity and on the contribution of the peptide bound to HLA-C in the recognition by KIR2DL. The crystal structure of the complex suggests also how KIR may cluster at the site of interaction between NK cells and target cells that express HLA-C. KIR molecules that are bound to MHC class I on target cells become tyrosine phosphorylated and recruit the tyrosine phosphatase SHP-1 to an amino acid sequence motif, called immunoreceptor tyrosine-based inhibition motif (ITIM), in their cytoplasmic tail. A mutated SHP-1 molecule engineered and expressed in NK cells was used to identify the direct substrate of SHP-1 during inhibition of NK cell cytotoxicity. The result of this experiment challenges current hypotheses on the inhibitory mechanism. KIR engagement by MHC class I on target cells completely blocks tyrosine phosphorylation of the activation receptor 2B4, also called CD244. New experiments have now shown that 2B4 is not a direct substrate of the tyrosine phosphatase SHP-1 bound to KIR but that KIR blocks a central step in the activation pathway of NK cells which regulates other signals, such as tyrosine phosphorylation of the receptor 2B4. The results provide an explanation for the inhibitory effect of KIR engagement on adhesion of NK cells to target cells.